Development

Demand from pandemic sees UK housing prices highest in 16 years

  • 5 Oct 2020

The UK’s housing market has seen the highest month-on-month growth in property prices since February 2004, which has been fuelled by coronavirus and changing lifestyles.

The average home is now worth around £225,000 in the UK, which included a 3% increase in August 2020.

Despite a national recession, demand for homes is up 34% than one year ago, particularly for four and five bedroom homes with gardens, as households adjust to lifestyle changes following COVID-19.

Rightmove explained in their weekly newsletter that this change in demand was driven by people looking for more space, whether for the family members to stay with them or to include remote working as well.

Especially, with an interest to live in the countryside or places which had more green space.

They explained ‘the strongest sector is top of the ladder, which includes four-bed detached homes and larger. The number of sales being agreed, compared with the same period last year, more than doubled in August in this sector, up by 104%.’

‘While in the second-stepper sector (three- or four-bed homes excluding four-bed detached) they were up by 55%. The first-time-buyer sector of two bedrooms or fewer, although not as strong as the larger homes sectors, still saw sales agreed up by 36%.’

Accordingly, with remote working now crucial for any employee and company, we essentially have more people interested in the same type of property.

Whilst you may have only needed a three bedroom home, you may now be actively looking for a four or five bedroom – and you may be looking in the outskirts, since you do not have to commute and want to get better value for money.

The result? Growth in property prices all around, except the offices which are going to get hit pretty hard.

Nationwide chief economist, Robert Gardner, commented: “The bounce-back in prices reflects the unexpectedly rapid recovery in housing market activity since the easing of lockdown restrictions.

“House prices have now reversed the losses recorded in May and June and are at a new all-time high.

“This rebound reflects a number of factors. Pent-up demand is coming through, where decisions taken to move before lockdown are progressing.

“Behavioural shifts may also be boosting activity, as people reassess their housing needs and preferences as a result of life in lockdown.

“Our own research, conducted in May, indicated that around 15% of people surveyed were considering moving as a result of lockdown.”

Although the growth in house prices is exciting, homeowners and buyers should approach with caution, warns specialist finance provider, MT Finance.

The provider wrote on their website that ‘the long-term impact of the COVID-19 pandemic and resulting lockdown will not begin to be borne out until the furlough scheme has truly ended in October.;

‘Only then will we have visibility on the resulting unemployment numbers and the impact this will have on the nation’s finances and indeed the property market.’

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